Wednesday, July 29, 2009

A persistent campaign by activists to stop metals major Vedanta Resources from mining in Orissa’s Niyamgiri mountains for bauxite got a boost today. The Church of England, that has invested in the company’s stocks, said its representatives will meet Vedanta’s management to discuss the issues raised by human rights campaigners.

Among other things, the Dongria Kondh tribals at Niyamgiri consider the mountain and the surrounding forests as their sacred land, their culture and way of life tied in these. There are also various ecological issues in allowing mining to take place there.

Earlier this week, campaigners from several not-for-profit organisations camped outside the venue where Vedanta held its annual general meeting of shareholders and protested the company’s plans at Niyamgiri. They were urging bodies like the Church of England and local councils (like theMiddlesbrough Borough Council) to divest from Vedanta.

“The independent Ethical Investment Advisory Group (EIAG) advises the three national investing bodies of the Church of England, namely the Church Commissioners, the Church of England Pensions Board and the Central Board of Finance Church Funds. Each body is responsible for its own investment policies, but they are advised by the EIAG, which develops and coordinates ethical investment policy. It offers practical ethical investment advice in a theological context and seeks to promote high standards of corporate behaviour and the principles of integrity, accountability and transparency in corporate life. The EIAG has now met one of the tribal representatives and campaigners on their behalf, and hopes also to meet Vedanta’s management, to discuss the controversial bauxite project in Orissa,” said Louis Henderson, a spokesperson for the Church, to Business Standard.

Th Church’s investment in Vedanta stock is relatively small,at £2.5 million, but a divestment would be a powerfully symbolic gesture and a massive victory for campaigners. Earlier last year, when the Norwegian government withdrew its sovereign pension fund’s $13.2 million investment from Vedanta, it had a profound impact, so much so that the Supreme Court in India cited this action in one of its recent rulings.

The Church of England’s total investment portfolio is in excess of £7 billion. Church investors use their influence as shareholders to improve corporate behaviour. For certain sensitive industries, such as mining companies, the EIAG has a three-year monitoring and engagement process.

The Church is also selective about where its money is invested. “As a rule we do not invest in certain businesses like pornography, tobacco, breweries (alcohol) and armaments,” said Henderson. The Church, he said, looks beyond basic criteria and ensures that even apparently good businesses are conducted ethically. There has been one instance in the past where even though the business was clean, the Church had to pull out its investment on ethical grounds, he said. “After having tried to influence for the better, if we don’t succeed, we divest,” Henderson stated.

In law, the primary duty of trustees, including the Church of England’s central investing bodies, is to produce a good financial return on the investments for their beneficiaries. But, ethical considerations are rigorously taken into account in keeping with the Church’s Christian values, he

“During nearly 30 years of campaigning for the defence of human rights, protection of the environment and the rights of indigenous people, I have seen at first hand the devastating effect that many mining, logging, oil and gas communities have caused to the environment and to communities all over the world, particularly in the developing world,” declared Bianca Jagger, who is spearheading the campaign against Vedanata’s Orissa plans in the UK. “These companies act in the interests of financial gain, rather than the interests of the communities where they operate. These corporations must be held accountable for their actions. They have a duty to conduct business in a socially responsible and ethical manner. They cannot be allowed to cut off the livelihood of local inhabitants, to commit terrible environmental and human rights violations, and to endanger the livelihood of future generations.”

Tuesday, July 28, 2009

Tata Motors has roped in international consultants Roland Berger Strategy Consultants (based in Munich) and KPMG to help its British car brands Jaguar-Land Rover (JLR) trim costs and help manage cash flow.

Tata Motors Vice-Chairman Ravi Kant said in a press conference in Mumbai yesterday the two consultants had been on this work for two months now. However, he refused to give more details on the exact brief these consultants had been brought in with.

Both Roland Berger and JLR refused to discuss this development and redirected media queries to Tata Motors.

JLR, which had been a profitable venture in the first half of 2008 (while it was still owned by Ford Motor Company), is now a loss-making venture. Since mid-2008, with a severe erosion in demand for luxury cars impacting the business of JLR, the British company posted a loss of Rs 2,400 crore for the 10 months ended March 2009, after it was acquired by Tata Motors.

The fall in demand for luxury and premium cars globally had commenced around the same time Tata Motors came to own JLR. Earlier last month, while announcing Tata Motors’ financial results, Kant had said that JLR would turnaround in two years.

Even before hiring the consultants, JLR had taken some initiatives to cut costs on its own. It has already slashed some 2,200 jobs in the past year. The company will be running the programme at its Halewood plant to find up to 300 additional volunteers, which closes year end, but is not yet functional. This is expected to be implemented after the summer shutdown. The total headcount by year end is expected to be around 14,000, according to a JLR spokesperson.

Cash flow for managing its routine operations too has become an issue in JLR with loans worth £340 million in the pipeline from European Investment Bank awaiting the UK government’s guarantee. Prolonged negotiations between Tata Motors and the UK government over the last four months have not fructified yet.

In February this year, Tata Strategic, a Tata group consulting company, had tied up with Roland Berger to expand their consulting practices in West Asia, South-East Asia and Africa. Roland Berger Strategy Consultants is one of the leading strategy consultants in the world and the biggest with European origin with 36 offices in 25 countries.

The consultancy is an independent partnership, exclusively owned by its 180 Partners. In 2008, the 2,000 employees of Roland Berger Strategy Consultants generated revenues of $1 billion.

Monday, July 27, 2009

Campaigners from Hamburg-based (Germany) think-tank World Future Council, along with British charity ActionAid, today protested against the Church of England and Middlesbrough Borough Council for investing their pension funds in UK-based metals and mining company Vedanta Resources Plc (with an $8-billion group turnover), whose reputation for trampling human rights and alleged unclean mining practices has been questioned before.

World Future Council’s chair and human rights campaigner Bianca Jagger, along with fellow campaigners, today protested at The Lincoln Centre where the mining company held its annual general meeting, raising questions over religious and government bodies like the Church and local councils investing in a company that has been seen in a bad light in the past.

Campaigners have been protesting the company’s plans to mine for bauxite (to extract aluminum) in Niyamgiri hills in Orissa’s Kalahandi district that is considered holy for the local Dongria Kondh community.

Campaigners targetting pension funds as a way of keeping a check on the business practices of Vedanta Resources has gained momentum since the sovereign pension fund of the Norwegian government divested from the company in 2007 after conducting an independent investigation into the business practices of the metals major.

Norway’s pension fund, the world’s second-largest sovereign wealth fund, had in November 2007 sold shares in Vedanta Resources (estimated to be worth $13.2 million at the time), citing “systematic” environmental and human rights failures at the company’s four Indian subsidiaries.

“The fund runs an unacceptable risk of complicity in present and future severe environmental damage and systematic human rights violations by continuing to invest in the company,” the Norwegian government’s finance ministry had said in the statement, while divesting in Vedanta.

The fund’s ethical council had considered four of Vedanta’s subsidiaries — Sterlite Industries, Madras Aluminum Company, Bharat Aluminum Company and Vedanta Alumina — all based in India.

Today, a Vedanta Resources spokesperson said: “Vedanta shares the concerns that have been raised by some of our investors about the campaigns of ActionAid and Survival against the lawful commencement of bauxite mining operations at Lanjigarh. As a company, we are committed to developing this project in line with the best international standards for environmental management and in a way that benefits communities and people around it. The Supreme Court (of India), in its decision to approve the project, has taken account of their views and the many benefits in terms of employment, education and healthcare, that the project will bring. We are proceeding with the project on the basis agreed with them and we urge these NGOs to respect the decision of the legitimate authority in India, the world’s largest democracy.”

Attempts to get the reaction of the Church of England turned out to be futile.

Wednesday, July 22, 2009

Three of the largest unions in Britain — GMB, Unite and Unison — have spoken against a proposal of National Grid, the gas and power supplier, to outsource some of its non-core activities like payroll processing, personnel functions, accounts, invoicing and procurement to India.

The unions are planning a major protest in Birmingham on July 27, at National Grid’s annual general meeting. National Grid (NG) is a leading supplier of gas and electricity in Britain and the northeast region of the US.

GMB has said senior executives from NG were in India earlier this month, scouting for ways to cut costs by outsourcing these functions from India.

In an e-mail response to queries from Business Standard, a NG spokesperson said the company already outsources some information services (IS) support from India, from companies including Tata Consultancy Services, Wipro and Zensar Technologies. “Cost is not the main reason why the company outsources some of its IS support to Indian companies. It is because there is currently an IT skills shortage in the UK and because of the high standard of IT skills in India.”

The unions have said that 181 jobs from NG’s Newcastle site (in northeast UK) that currently undertakes these activities are at stake. The unions have protested this move, particularly in the backdrop of NG recently announcing global profits of £2,915 million for the year ending March 31, a 12 per cent increase over the previous year.

“Despite these huge profits, staff and unions at Newcastle have been working with the company to identify further savings,” a union statement said.

Gary Smith, GMB National Secretary, said: “One of National Grid’s competitors is offering a commitment to not to offshore their back ground office functions. National Grid is the most profitable company in the sector and the employees deserve the same commitment.” Smith said the company had started to outsource some non-core activities from CSC in India in 2003, but was forced to return these activities to the UK in 2008.

The company spokesperson said no decision has been made on the future course of action for outsourcing more from India. “We have not taken any decisions to outsource any services or close any location. We announced we had narrowed down the number of external companies we are looking at from four to two. We don’t expect to make any decisions until later in the summer and we are committed to consulting our employees and trade unions throughout the process.”

The company said it has been exploring other way to cut costs, apart from outsourcing of services. “Since February, through an internal performance challenge, we have also been identifying internal improvements to meet the challenge of finding savings of around £7 million,” the company said.

Sunday, July 19, 2009

Reportedly insists on no loan guarantee if the government is not allowed any say in the company’s future

The British government won’t guarantee the much-awaited £340 million loan for Tata Motors’ luxury car maker, Jaguar Land Rover, unless it has a say in the company’s future plans.

Business Secretary (Minister) and head of the Department for Business, Enterprise and Regulatory Reform (BERR), Peter Mandelson, has made this clear, according to The Sunday Telegraph. The loan is from the European Investment Bank (EIB) and is urgently needed by JLR, which has been making huge losses for the past year, since Tata took control of its ownership.

Prolonged negotiations have been on between Tata Group and the UK government over the conditions the former must accept to secure the loan guarantee. According to this report, that cites its sources as “people close to the situation”, Tata is yet to give its response to this revised insistence by the UK government.

Responding to the report, a JLR spokesperson said: “Talks are continuing between the government and our parent, Tata Motors, around the loan guarantees, but we have no further comment to make.”

Ever since the loan from EIB was approved in early April, the UK government has been indicating it wants a say in JLR’s future business plans, while Tata Motors have sought complete freedom in running JLR, without any operational intervention from the state. JLR’s CEO, David Smith, in an interview to Business Standard last week, had said his company does not wish to offer a board berth to the UK government, and the loan guarantee would be accepted only on “commercial terms,” just as it would accept from any other lender.

Though the UK government is said to have come to terms with the counter-offer and not insist on a board berth, it has sought a say in participating in the business plans that Tata Group may chalk out for the revival of JLR.

Though JLR is scouting for fresh funding to smoothen its cash-strapped operations, the loan from EIB is considered vital for its future research and development, particularly in the area of developing “green cars” that can strengthen its competitiveness in the European car market for the low-emission cars of the future. Smith had also said that while JLR awaits the UK government’s guarantee, the company is close to securing fresh funding from the Indian banking system as well.

Lack of money to run its operations has already taken a toll on its balance sheet. Due to falling demand for premium and luxury cars globally, JLR had reported a loss of Rs 2,400 crore for the 10 months ending March 2009. This loss coincides with the period Tata Motors came to own it. In recent public statements, TM’s vice chairman and former managing director, Ravi Kant, had said he was hopeful of JLR’s turnaround in two years.

Box office collections from Indian films in the UK and Republic of Ireland have witnessed a minor slip in 2008 accounting for 1.4 per cent of the total collections in this region in 2008, from a 1.6 per cent market share in 2007. Collections from Indian films in the UK had peaked in 2006, when its overall collection accounted for 1.8 per cent, according to the UK Film Council Statistical Year Book 2009, released this past weekend.

Apart from the US, India is the only country to be listed in this year’s book as a standalone category on the basis of films’ country of origin. Movies made by US production houses accounted for 65.2 per cent of total gross box office collection in 2008. But this also slipped from the 2007 level of 67.7 per cent. In 2008, collections by movies made in the UK and Europe improved to 30.7 per cent and 2.3 per cent, respectively, from 28.5 per cent and 1.8 per cent in 2007.

Interestingly, the number of movies originating from India and shown in the UK and Ireland almost matched those from the UK. Of the 527 films released in 2008, 76 (14.4 per cent) were from India, while films of UK/UK co-productions were 82 (15.6 per cent).

Shah Rukh Khan starrer, Rab Ne Bana De Jodi, was the second largest grosser (£1.5 million) among all foreign films released in the UK and Ireland, followed by Singh is Kinng (£1.4 million) starring Akshay Kumar. In fact, films with Indian origin or co-produced by Indian production houses accounted for half of the top 10 grossing foreign films in the UK and Ireland in 2008.

Yash Raj as a production house also emerged as the biggest gainer among the foreign film production houses that released movies in the UK and Ireland, with a total collection in 2008 at £3.5 million.

Despite the popularity of Indian movies in the UK, the Indian film industry ranks low among its global peers. At 2.1 per cent of the global box office collection, India is ranked 13 among the global markets for “filmed entertainment revenue”. Citing a PricewaterhouseCoopers report, the UK Film Council year book said UK with a 7.7 per cent share, is the third largest market for films in the world. US (41.5 per cent) and Japan (10.4 per cent) are the top two markets.

“The world filmed entertainment market is still dominated by the largest developed economies. Although the Indian market is vast in terms of admissions and both India and China have huge populations and are growing fast economically, their filmed entertainment markets still count in US dollar terms below Australia (population 21 million) and Italy (population 59 million),” according to the 2009 Year Book.

Saturday, July 18, 2009

The Business & Enterprise Committee in the UK, appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Business, Enterprise & Regulatory Reform (BERR), has voiced its disappointment over the government’s delays in providing support to the cash-strapped Jaguar Land Rover (JLR), the Midlands-based car maker which is now a part of Tata Motors.

In a report submitted by this committee, it said: “Despite its strategic importance and although the government considered that Jaguar Land Rover was a ‘top priority’, the company told us it had proved impossible to conclude negotiations between the company and BERR about the terms of a guarantee, even though it had already received loan approval from the EIB for a substantial facility, £340 million, against our future technology investments.”

“All that is under discussion is the government’s guarantee. As on 7 July 2009, there has been no indication that there will be such a guarantee: we are astounded that it has taken so long to arrange this, particularly since the support needed is so limited,” the committee’s report said.

Though European Investment Bank (EIB) had approved a loan of £340 million for JLR to invest in “green technologies” in the first week of April 2009 to help it compete with other major European luxury car makers like BMW and Daimler, JLR has been unable to access this money for want of a guarantee from the UK government. It has been widely reported that the conditions posed by the UK government have been too stringent and may come in the way of smooth operations of the car marker.

Earlier last week, in an exclusive interview to Business Standard, JLR’s CEO David Smith said, though he was hopeful of securing this guarantee, the company was willing to do so only on commercial terms and the company will not offer the UK government a berth on its board.

“I think we all believe that the government is not very good at running companies. Anything we agree with the government or in fact any other lender should not interfere with our ability to run the company. Any agreement we do reach is commercial and gives us the ability to run the business properly,” Smith had said.

Reacting to the committee’s remonstrance at the government’s delay in providing the guarantee, JLR today said: “We welcome the committee’s conclusion that the UK industry has strong premium brands which, together with the supply chain, can lead the transition to low carbon vehicles as outlined in the recent NAIGT report. Jaguar Land Rover is playing a full role, investing over £800 million to reduce vehicle CO2 emissions and improve fuel efficiency. The report refers to the delay in drawing down the £340-million European Investment Bank loan for green technologies approved in April, which supports our investment plans. Clearly, we are eager to see this resolved as soon as possible.”

Smith was among the experts who gave evidence to the committee. Today he echoed the sense of urgency expressed in the report.

“For a year now, Jaguar Land Rover and other UK automotive exporters have been conducting business in the face of a severe recession that has stalled global economies. I fully support the Business and Enterprise Committee’s call for urgent action to allow the UK automotive industry to survive this crisis, coupled with a long term strategy to enable motor manufacturing to flourish in the UK. Environmental innovation is absolutely critical to our future and, if we are serious about a low carbon industry in the UK, we are going to have to decide to invest in it now,” he said.

Wednesday, July 15, 2009

Jaguar’s plan to cut 300 more jobs today at its Halewood plant comes at a time when unemployment numbers in the UK have risen to record levels, at 2.38 million. UK’s Office for National Statistics in its monthly statement today said the unemployment rate was 7.6 per cent in the three months to May, up 0.9 percentage points from the previous three months and up 2.4 percentage points on the year. The unemployment level of 2.38 million was up 281,000 on the previous three months and up 753,000 on the year.

Commenting on these figures which show unemployment at its highest level since 1995, Katja Hall, director of employment policy with industry body CBI, said: “This hefty rise is in line with our forecast and reflects the tough climate that businesses face. Sadly, more and more jobs will be lost in this difficult recession and we expect unemployment to peak at three million next spring.”

Alan Tomlinson, partner, UK insolvency practitioners, Tomlinsons, further said that real unemployment in the private sector is higher than the figures reveal, but is being masked by the relative buoyancy of the public sector.

Tata Motors-owned Jaguar Land Rover (JLR) today announced 300 more job cuts at its Halewood Plant in Merseyside, where it plans to cease production of the Jaguar X-TYPE, an eight-year-old range of vehicles that until recently constituted nearly a fourth of total annual production.

Over 350,000 units of the X-TYPE were sold over the past eight years; it has been one of the most successful models to roll out of Jaguar.

Said CEO David Smith: “Our industry has been especially badly hit by the recession and the premium sector more than others. Jaguar Land Rover’s retail sales fell by 28 per cent in the past 10 months. We have taken unprecedented actions to cut costs, including reduced production volumes, significant cuts to investment plans and some 2,200 job losses. Ceasing production of the X-TYPE early, with further redundancies and temporary shutdowns at Halewood, is necessary to protect our other investment plans.”

In a statement issued to the media, the company said it also expects the need to take a further three weeks or more of shutdown of the Halewood plant over the balance of this year, starting in September, due to on-going weakness in the market. “Further actions will be determined by the state of the market and the speed with which the already-approved ¤340 million European Investment Bank loan can be drawn,” the company said.

Yesterday, amidst fear of the closure of the Halewood plant, the country’s Business Secretary (minister) Lord Mandelson said he would do everything inhis power to keep the plant open. “We do need to be confident that the taxpayers’ money that goes into Jaguar will come back out again – that the taxpayer won’t be left high and dry,” he said in an interview to Liverpool Daily Post.

The Halewood plant of JLR is one of the smallest among its four UK assembly plants in numbers employed. Halewood currently has around 2,000 employees, as does Castle Bromwich, with Solihull at around 5,000, and 3,000 at the Gaydon and 2,000 at the Whitley R&D centres.

Last year 16,320 X-TYPEs were sold out of the overall Jaguar total for the year, of 65,446. Admitting that ceasing the output of X-TYPE would be a major cut in its proudction, the company spokesperson said other models would take its place to fill the gap. “...We are rebuilding Jaguar. The new XJ is a product we are very excited about and think will really change perceptions of the brand, following what we have already done with XK and XF over the past three years. The XF has good orders with 10MY versions - the XFR and 3 litre diesel particularly, and we will be launching the new XJ as the X-TYPE disappears, which we expect to record strong orders.”

Monday, July 13, 2009

Jaguar Land Lover, the loss-wracked luxury car maker owned by Tata Motors, today clarified that the planned maintenance shutdown of its three units in the UK this summer will be for a shorter period than the usual annual shutdown.

In a statement correcting media stories that appeared on Sunday suggesting its plants would be shut for longer, a company spokersperson said, “The reality is that our annual summer shutdown begins at the end of next week (July 23) as scheduled and will last for two weeks, with the plants due to restart on August 10. This two-week break is actually a week shorter than the traditional three-week break our plants have previously had.”

This statement confirms that despite the fall in demand for cars globally, JLR is not planning to reduce its production to a level lower than what it is now.

JLR spokesperson added, “At Solihull, we have just reinstated the second shift as we build up production of the new 10MY Discovery, Range Rover Sport and Range Rover; at Castle Bromwich, with orders for XK and XF to fulfill, plus our work to finalise production of the new XJ; and at Halewood with Freelander and X-TYPE, we will not be extending the annual summer shutdown period.”

Annual shut down of plants for maintenance, ranging from a week to two weeks, is a regular and established practice among most car makers in the world and does not conclusively prove a production cut.

However, for the year ending March 2009, JLR had to make production cuts to adjust to the demand for its cars. The company had in March stated there had been a series of non-production days at all three of its UK assembly plants — Castle Bromwich and Solihull in the West Midlands and Halewood on Merseyside. Each plant lost an average of 25 days’ production, which equated to a volume reduction of approximately 25 per cent, month on month.

Friday, July 10, 2009

David Smith, 48, the big boss at British car maker Jaguar Land Rover (now owned by Tata Motors), says he has a strategy to make the financial bleeding stop and return to profitability soon. With just over a year as CEO of JLR, Smith has his hands full, with the unions on one side and the urgency to trim costs and return to profitability on the other. His biggest challenge, however, is outside his own control — the global economic recession that is keeping luxury car buyers away from his dealerships. Excerpts of an interview with S Kalyana Ramanathan:

The Euro 340-million loan from the European Investment Bank is waiting for the UK government’s gurantee for over three months now. Are you running out of time?We are all impatient. The loan was approved in April. What we need to do is make an agreement with the UK government around guarantees. We are still working through that negotiation, providing a lot of financial information. At the end of the day, we have to ensure the terms of the loan are commercial.

Is the UK government’s demand for a board berth in JLR holding back its gurantee for the EIB loan?I think, we all believe that the government is not very good at running companies. Anything we agree with the government or in fact with any other lender should not interfere with our ability to run the company. Any agreement we do reach is commercial and gives us the ability to run the business properly.

That clearly rules out your willingness to give a board berth and provide only the assets to back the government’s gurantee.Yes, that’s what I think a commercial loan implies. Its really about making sure the government has the right security, gets the right information and reporting, and it’s not about running the company.

Is the fact that JLR is now owned by a non-UK parent making negotiations with the banks or the UK government more difficult?No, I don’t think that’s the case at all. It has more to do with the economic conditions and conditions of the banks itself. They are just being very cautious. In fact, a high proportion of UK companies, including listed companies, have foreign ownership. So, that isn’t an issue at all.

Given the constraint of time, are you also looking at an alternate source of funds?We are. Naturally, we have been working with a number of commercial banks, both in India (Bank of Baroda) and UK. We already have some inquiries and that’s going well. And that’s more or less close to being done as well. We are not only trying to find money for the ongoing working capital requirements, but also for big investments in the future. We want to invest in green technologies, in new products, entering new markets, including the strategies to enter into India that we recently launched. There are a lot of exciting opportunities for the business.

Given the present pressure to contain costs, would Tata Group have a bigger role to play in JLR now? Have you finalised your parts’ sourcing plans from India?We are already using some of the services from India, like IT and engineering. It’s too early to put a number to it now. We roughly source 20 per cent of our component requirements from outside the UK/Europe supply base. Most of this is from Eastern Europe now. We want to increase that to a third. That clearly is the opportunity. This is not just India, but India will have a natural advantage with a company (Tata Motors) that is familar with India. We already have some experience in sourcing components and engineering services from India. Those have been a good expereinces and will help us accelerate it.

Corus Group, Europe’s second-largest steel maker and a subsidiary of Tata Steel, today announced an additional 366 job cuts at its North East plant at Scunthorpe. A spokesperson clarified that these were in addition to the 500 white-collar job losses announced for this plant last month.

In a statement issued today, Corus said 366 jobs have been identified as being at risk as part of its proposals to improve the competitiveness of this unit by aligning employment costs with anticipated steel demand. “Consultations with employees and their representatives have begun on the Scunthorpe site today. Wherever possible the company will seek voluntary redundancies, while at the same time ensuring that critical skills are retained. Support packages will be available to those leaving the company,” the company said.

Just two weeks earlier, Tata Steel, as part of its 2008-09 financial statement, had said 2,000 jobs were at risk, that included 500 white collar job losses through Corus’ Long Products division, the majority of which could be at Scunthorpe.

Reacting to today’s announcement, John Wilson, senior officer of the GMB labour union, said: "With this further announcement, there is an even greater need for urgency from the government to secure this bedrock manufacturing industry and reassure the local community.”

Scunthorpe Telegraph, a regional newspaper, quoting Scunthorpe Corus steelworks’ director Sean Lyons said, "We have been working hard with the trade unions to come up with a cost-saving solution that would have avoided job reductions and a proposal was put to Scunthorpe employees in May. Unfortunately, union representatives decided that they were unable to ballot their members on the cost saving proposal. We have had to take this urgent action to align our employment costs to current and forecast demand for our products. Wherever possible we will seek to utilise volunteers, but we must ensure that the capability of plants or departments is not jeopardised.”

With its main steel-making operations primarily in the UK and the Netherlands, Corus supplies steel and related services to the construction, automotive, packaging, mechanical engineering and other markets worldwide. tata acquired Corus in 2007, making the latter one of the top 10 steel producers in the world.

Thursday, July 2, 2009

The management of Tata Group-owned Jaguar Land Rover has offered a one-time payment of £200 to those of its salaried employees who are willing to push their salary receiving date by 15 days, starting from August this year. This is part of the car maker’s plans to manage its cash flow problems, pending fresh flow of funds from banks to manage its operations more smoothly.

A JLR spokesperson said this offer will apply to nearly 6,000 of its 14,500 employees who are categorised as salaried employees. The rest of the workers are paid weekly. He further said 25 per cent of those to whom this offer was made have already accepted it.

A statement from the company said, “It is not an unusual business practice for employee salary payments to be made at the end of each month, but Jaguar Land Rover has a legacy system whereby these payments are currently made mid-month. In its ongoing plans to streamline business operations and aid cash flow, the company is seeking to adopt this industry norm and, in recognition of the possible inconvenience to employees whose accounts are currently arranged around mid-month payments, is offering a one-time payment of £200 to those employees who agree to the change.”

The company spokesperson further said, “(This) should be taken in the context of a number of actions being taken across the organisation to streamline operations and, as another example of our ongoing policy of working with employees on change, much effort has gone into minimising any short-term inconvenience for employees...(and) over 25 per cent of affected employees accepted the proposal in the first 48 hours and we anticipate a very strong and positive overall response to the request.”

This development comes at a time when JLR has been facing several challenges affecting its day to day operations, including a delay in securing the UK government’s guarantee for a £340 million (Rs 2,700 crore) “green loan” approved by the Luxembourg-based European Investment Bank (EIB) in April. JLR’s financial performance, due to poor demand for premium and luxury cars globally, has been particularly weak, resulting in a loss of £281 million (Rs 2,234 crore) for the 10 months ending March 31.

The poor performance has also severely impacted the bottom line of its new parent, Tata Motors as well. Tata Motors’ full-year earnings report to March 31, issued last week, showed that JLR’s global retail volumes since June 2, 2008, when it took over, were down 28 per cent overall — Jaguar was actually up 1 per cent and Land Rover down 35 per cent. This was also the first time JLR has been included in Tata Motors’ earnings report and reflects a reversal in the company’s fortunes since its purchase. Prior to this, JLR had reported a strongly profitable 18-month performance in the period up to May 31, 2008, when it was owned by American car maker Ford Motor Company.